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TMI Blog2013 (8) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing decision of Commissioner of Income Tax vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided in favour of assessee. - W. P. (C) 7974/2012 - - - Dated:- 31-7-2013 - Sanjiv Khanna And Sanjeev Sachdeva,JJ. For the Petitioner : Mr. Ajay Vohra and Ms. Kavita Jha, Advocates. For the Respondent : Mr. N. P. Sahni, Sr. Standing Counsel. JUDGMENT Sanjiv Khanna, J. (Oral) 1. The petitioner has impugned the re-assessment notice dated 29th March, 2012 issued under Section 148 of the Income Tax Act, 1961 (Act, for short). The notice relates to the assessment year 2006-07. 2. The reasons recorded by the Assessing Officer for issue of notice as postulated and required by Section 147 read with Section 151 of the Act read as under:- The assessment of M/s Select Vacations Pvt. Ltd. for the assessment year 2006-07 was completed after scrutiny in December 2008 determining a loss of Rs.44,28,400/-. Audit scrutiny revealed that the assessee has shown total income of Rs.52,36,040/- whereas as per TDS certificates assessee s total income is Rs.1,11,65,657/-. In view of above the mistake resulted in underassessment of income of Rs. 59,29,617/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich TDS was deducted, was examined during the course of the assessment proceedings. Reliance is placed upon letter dated 24th October, 2008, by which the assessee had furnished details of TDS certificates, bills raised by the petitioner and other details including invoices, credit taken to different accounts, etc. (iii) The assessee had made full and true disclosure of material facts. Explanation (1) is not applicable and nothing was to be inferred or deduced. Material facts as disclosed were clear and no decoding or decrypting was required. Nothing had to be inferred or gathered from the said facts. 5. Senior Standing Counsel appearing for the Revenue submits that the Assessing Officer had not examined the difference between the TDS certificates and the income or receipts declared by the assessee. TDS was deducted on amount of Rs. 1,11,65,657/-, whereas the receipt of income as declared was Rs. 52,36,040/-. No explanation was called from the assessee to ascertain and know the reason/cause for the difference. The assessee had failed to disclose income or receipt of Rs.59,29,617/-. 6. The petitioner is engaged in the business of tours and travels. It specialises in arranging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... client) Credit: Client A/c (with the amount of invoice) 3. When bill are received from suppliers like Hotels, Ticketing agents from whom services are taken for the client Debit: Tour A/c (with the net cost of ticket) Debit: TDS (With TDS deducted on commission part by the supplier and added to the bills) Credit: Ticketing Agent (with the amount payable to the supplier i.e. net cost of the ticket plus TDS) 4. After completion of the tour and after bills from all suppliers are received and debited to the Tour A/c, the balance in the tour a/c represents the profit earned on the particular tour. The accounting entry for the recognizing the profit on tour is as under: Debit: Tour A/c (with the balance remaining in the tour a/c after all expenses for the tour have been accounted for) Credit: Income from Tour services. Hence, it is not the amount of billing which is shown as income but the profit earned on the tours after deducting all direct costs. This is the standard accounting policy followed by all the tour companies. (emphasis supplied) Thus, the system and method of accounting was explained. Reference was made to the TDS certificates received and they were co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of the Assessing Officer to believe that income has escaped assessment and does not mean that the Assessing Officer should have finally ascertained the said fact by legal evidence or reached a final conclusion, as this is determined and decided in the assessment order which is the final stage before the Assessing Officer. {see Signature Hotels P. Ltd. Vs. Income-Tax Officer and Another, [2011] 338 ITR 51 (Delhi), which refers to ITO versus Lakhmani Mewal Das, [1976] 103 ITR 437 (SC), Ganga Saran and Sons Private Limited versus Income-Tax Officer-I, [1981] 130 ITR 1 (SC) and Phool Chand Bajrang Lal and Another versus Income-Tax Officer and Another, [1993] (203) ITR 456 (SC) and Income-Tax Officer, New Delhi, and Another versus Dwarka Dass and Brothers, [1981] 131 ITR 571 (Del)}. 12. Recently we had quashed reassessment notice issued in the case of Le Passage to India Tours Travels (P) Ltd. Vs. ACIT, W.P (C) 8685/2010 decided on 9th March, 2011 recording as under:- 13. The ground and reasoning for reopening quoted above relate to the very basic nature and character of the accounting method adopted by the petitioner. The petitioner has adopted a system of netting as thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of change of opinion as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4-1989, the assessing officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words reason to believe , Parliament reintroduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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